DISTRICT ADMINISTRATIVE COURT OF THE CITY OF KYIV STARTS JUDICIAL PRACTICE ON TRANSFER PRICING

​ARZINGER law firm,
Kyiv, Ukraine, Mon, June, 26, 2017

On 30 May 2017 District Administrative Court of the city of Kyiv rendered a decision in Case No.826/19192/161 focused on compliance of controlled transactions under forward contracts with the arm’s length principle.

Thus, the court states inter alia the following: “The defendant does not deny that the contract value and the price of the goods are set in additional agreements. However, in accordance with the obligatory terms of the forward contract, these figures should be determined by the parties directly in the contract at the time of its conclusion and should remain unchanged. At the same time, non-compliance with the criteria of the definition "forward contract" makes the transfer price determination date non-compliant as well.”

The analyzed judicial decision is quite specific due to its being unique. Until now, there have been no administrative cases in Ukraine subject matter of which would be the essence and legality of the determination of a transfer price, while the existing case law was mainly circled around the issue of submitting reports on controlled transactions and appealing fines for failure to submit or delayed submission of such reports. In view of the recent global trends and changes in tax legislation, we may expect a further increase in the mass fraction of tax litigations related specifically to transfer pricing issues.

Kind regards and best wishes, Kateryna Gupalo Partner, Head of Tax and Customs Disputes practice Kateryna.Gupalo@arzinger.ua